Monday, December 31, 2012

Why the major global banks have become the enemy of the State and should be treated in the same way as Organised Crime or Financial Terrorists!

The most influential
book I have ever read, which first alerted me to the incredible complexities of
global criminal financing is called 'Hot Money and the Politics of Debt'. It
was published in 1987, written by a Canadian professor of economics called R.'Tom'
Naylor. It is a textbook on global economics, but it reads like a thriller. It
fascinated and appalled me in equal measure, and no book I have ever read,
before or since, has influenced and informed me as much as this book has done.
I re-read it periodically to renew my faith in the legitimacy of my views, and
I owe Tom, who is now a good friend, a great debt of gratitude for sharing his
insights with me.

It was Tom Naylor
who first alerted me to the existence of the vast ball of hot and homeless
money which roams around the world looking for a temporary home before moving
on to find another refuge which offers a better rate or a better political
climate; and how the world '...of high finance, governmental and corporate,
became hostage to its existence, and the price the rest of the world will
continue to have to pay until those hostages can be released from its vice-like
grip...'

"...Since the
late 1970s, the world has also seen a dramatic rise in the organisational
skills of white-collar criminals - specifically their ability to control
illegal markets, to render the operation of legal markets illegal and to
debauch the political systems that are supposed to keep their power in check.
The financial counterpart of the growing power and scope of white-collar crime
is the increasing use of the instruments of peekaboo finance and a parallel
expansion of its machinery..."

The financial crisis
which has caused such damage to the economies of a wide group of Western economies,
arose directly from the criminal activities of banks who had long since stopped
seeking to provide conventional banking services to their customers, and who,
through the use of Naylor's peekaboo financing, were looking instead for ways
in which to continue to manipulate the world's sources of capital flows, with
the view of enhancing their own profitability.

The world's major
banks have ceased to have any conventional function as the providers of banking
services to ordinary men and women. They are now profit centres in their own
right, generating profits to satisfy the exponentially-growing demands of their
shareholders, who have come to rely on the dividends paid to them by their
bankers in return for maintaining their shareholdings.

These banks have no
'normal' social purpose at all, in fact, if they could get rid of small clients
like you and me, from whom they make no money if we stay in credit (which is
why they underwrite the student loan system because it guarantees a generation
of young people permanently indebted to them), they would jettison us tomorrow.

They have been
trying to marginalise small retail clients for years, because we are no use to
them. They exist to create value through debt which they then sell to each
other and some clients in the form of securitised investment possibilities,
relying on the 'greater fool' theory to ensure they don't end up with the toxic
parcel at the end.

Their real role is
to facilitate the safe handling and onward transmission of Naylor's vast ball of hot, criminal money which rolls
around the financial world, seeking temporary accommodation.

They each take it
in turn to earn a profit from their actions before helping the money to move on
again to the next facilitator. That's what the major financial institutions in
the UK exist to do and have done for many years, and vast fortunes have been
built on this facilitation of such criminal activity. These banks (now on a
global basis) exist to facilitate the ambitions of international organised
crime, because they have the available capital which needs storing, housing, a
safe haven, and onward transmission in a disguised form. These institutions are
merely an extension of the criminal facilitation process, because the money
which they seek to manage and attract is no longer the proceeds and profits of
ordinary commercial businesses, but the proceeds of white-collar criminals,
organised crime gangs, drug traffickers, and foreign dictators.

They are an integral
part of the criminal money flow function, and they rely on their relationships with the major banks to be
allowed to 'wet their beak' in the pool of money which the major banks are
handling.

The modern problem
for the global financial sector is that the world's major banks now exist for
the purpose of supporting the financial interests of a relatively limited
number of major shareholders, Insurers, pension funds, other banks, (lots of
other banks), investment funds and trusts etc. These institutions exist, like
them, to handle and facilitate the through-put of the staggering volume of
criminal and dirty money which daily flows through the financial sector,
because the profits there from are just so incredibly valuable.

The biggest problem
for these banks is that by far the greatest amount of this money is illegal to
handle under international money laundering laws. All banking institutions are
now effectively subject to international laws which prohibit the handling or
the facilitation of criminally-acquired money from whatever source, and that
money includes the proceeds of drug trafficking, all other criminal activities
(including tax evasion), and the proceeds of terrorism. Added to that are the
criminal proceeds generated through the various exercises associated with
sanctions busting, so when taken as a whole, there is a vast reservoir of black
money which is legally denied to them, but which they desire very much indeed.

The answer for them
is how to find ways of handling that criminal money without being too easily
identified and interdicted. Money laundering methods have become ever more
sophisticated as the financial institutions have sought for ever more sophisticated
ways of handling the money without getting caught too often.

One of the ways in
which they send this message is to persuade their home Governments and
financial regulators that they are financial geniuses, who alone know how to
continue to maintain the throughput of capital upon which so much of the
well-being of the contemporary economy depends.

This is a particularly
subtle but cynical method for protecting their hegemony. They spread the
message that those who are employed within the banking sector are financial
geniuses without whom, the whole edifice would fail to function profitably.
They reinforce this message by paying their staffs salaries and bonuses which
outweigh anything normally dreamt of within the conventional meaning of the
realms of avarice, they engage in wholesale and widespread tax-planning and aggressive
fiscal avoidance schemes, and they encourage wholesale acts of internal
criminal fraud against their retail clients.

This exercise in wholesale
client gouging is predicated by a number of stimuli. First, retail clients are
considered to be fair game for being ripped off, because it is so easy, and can
generate such huge profits.

A recent meeting with
a former HSBC employee confirmed to me the ease with which PPI fraud was
perpetrated against the client base of the bank he worked in. He described how,
as a young bank employee he was routinely required to meet financial sales
targets of such vast proportions that the only way to achieve the monthly
numbers was to engage in PPI fraudulent sales in volumes which caused him to be
physically sick through shame at the end of a day's work.

He described how the
monthly targets were regularly increased as each financial target was achieved,
and how sales managers would regularly visit branches distributing new
'objection' sheets which he and his colleagues had to use to overcome client's sales
resistance. He described knowing that these sales were completely fraudulent,
and that none of the clients would ever be able to exercise the policies if
they needed to use them at any stage in the future.

The outcome of this
massive generation of criminal proceeds, estimated at about a figure of £40
billion, nationwide, was used by the banks as a means of co-mingling with large
sums of dirty and criminal money from illegal sources, but which enabled the
profits to be disguised.

The actions of
creating these fantasy finances were facilitated in no small way by the
criminally-complicit actions of the major firms of Chartered Accountants who
were routinely used to draw up and audit the annual returns. When coupled with the emergence of off-balance-sheet
accounting methods, offshore companies being used to shelter vast sums of cash
and other instruments, much of which were disguised by complex derivative
contracts; and the development of debt treatments which enabled profits to be
minimised for accounting purposes, and within a few years, the bank balance
sheets bore about as much resemblance to reality as puss in boots!

Once these
facilities were all in place, money laundering laws were routinely flouted, while
in-house MLROs were treated like mushrooms and expected to behave accordingly. Within
a very short space of time, banks had not only become too big to fail, they had
become too big to jail.

The money they were moving was so huge and Governments
so scared and gullible that the banks would indeed relocate to other
jurisdictions, as the majors would routinely threaten if public criticism
became too vociferous, that it became very easy to persuade Governments to turn
a blind eye, while regulators were encouraged to look the other way, when the
banks began engaging in a series of wholesale criminal activities.

The risk of going to
jail for managing the enormous sums from the illicit drug trade is small, when
governments are beholding for their contrived power to the banking cabals which
control the apparatus of fiat money.

It took the US
authorities to uncover these criminals and place them before the court of world
opinion. The British did nothing until the Americans took issue with them.

If there was any
lingering doubt about the supremacy of the internationalist banker over the
canons of law, the latest HSBC exemption from criminal charges proves
that the real masters of the planet are the criminal banksters. If this
settlement was an abnormality and not the rule, one might argue the expediency
for pragmatism, while deployable, is necessary. Unfortunately, for the
financial elites, the facts tell a very different story.

“...In court papers
filed in federal court in Brooklyn, the federal government said the case
against HSBC is related to the laundering of proceeds from narcotics
trafficking via the Black Market Peso Exchange, a method by which money launderers
convert cash narcotics dollars into Colombian pesos by buying and re-selling
wholesale consumer goods. “The lack of an effective anti-money laundering program
at HSBC Mexico and HSBC Bank USA, N.A. contributed to the conduct charged” in
the money-laundering case against narcotics traffickers, Justice
Department prosecutors said in court papers.”

“A year-long
investigation by a Senate committee uncovered that HSBC acted as a conduit for
drug money, disguised the sources of funds to evade U.S. sanctions against
Iran, and included among its clients businesses with alleged ties to terrorism.
HSBC’s internal culture has been “pervasively polluted for a long time,” said
Carl Levin, a senator from Michigan, who helped lead the investigation.”

In the seminal study
by John Hoefle coming out of the Executive Intelligence Research,HSBC: Flagship
Bank of Britain's Dope, Inc, the historic composition of dishonest business
dealings that transcend even shady banking is documented.

“It should come as
no surprise that British banking giant HSBC was caught laundering money for
drug cartels and terrorist groups. HSBC, as we shall show, is the kingpin bank
of the global drug trade, a bank which, since its founding in 1865, has been
devoted to financing drug crops and laundering the proceeds. HSBC is,
in fact, one of the key controlling institutions of the global illicit drug
cartel we call Dope, Inc.

If you think that is
an outlandish claim, consider the fact that Executive Intelligence Review,
through its book Dope, Inc., and in its affiliated War on Drugs magazine,
published in the early 1980s by the National Anti-Drug Coalition, have made
this charge for over 30 years, and have never been sued or challenged by the
bank.”

So, what is the
proposal for banks like HSBC and others who engage in criminal enterprises?

Thanks mostly to its
thriving dope business, HSBC has become one the biggest banks in the world.
Among its leading acquisitions internationally, it took over the Mercantile
Bank of India, London, and China, and the British Bank of the Middle East in
1959; and in 1992, it completed a slow takeover of England’s Midland Bank. In
1981, it made a bid for the flagship of the Inter-Alpha Group, the Royal Bank
of Scotland, which was blocked by the British Monopolies and Mergers Commission.

In 1997, it made a
major expansion into Ibero - America, buying parts or all of banks in Mexico,
Argentina, Peru, and Chile, and founding a new bank in Brazil.

From the Far East to
the Middle East to Ibero-America, everywhere the drug trade is flourishing, you
will find HSBC. It may not handle the dope, but it does handle the money,
making sure that the “citizens above suspicion” who run Dope, Inc. from places such
as the City of London get their cut of the proceeds.

Now HSBC has been
caught red-handed laundering money in the U.S. It’s time we set an example and revoke
its charter to do business here. This is a bank which has abused us, assaulted
our people, and violated the law with abandon. Revoke its charter and shut it down.
Now..."

I have tried to show
just how little these institutions really do to help and provide support for
the struggling British economy. They truly are major criminal enterprises and
they don't give a damn for their country of operation. They operate solely on a
zero-sum game, they will go to where the regulation is least and the profits
can be maximised to the greatest potential. That is why they will never leave
the UK.

These banks perform
no useful social purpose, and they deserve no sympathy or support. They exist only
to facilitate an international cadre of global white collar criminals and drug
traffickers. They have no interest in their retail customers who they routinely
despise, how else can you explain the level of institutionalised fraud they
have perpetrated against them and their interests; they don't want to fund business, or
underwrite social investment, you only have to consider the current minimalist level
of funding being provided to businesses which are starved of investment capital
to see the truth of this assertion, yet they expect the British tax-payer to
bail them out when they are failing; they don't want to pay tax, consider their
aggressive tax avoidance structures which they routinely seek to foist on the
Revenue, they don't want to contribute
in any way to the restructuring of the mess they have caused and in which they
have dumped the British people, and frankly, we would hardly notice their
passing if we took them down, one by one, and broke up their empires.

Yes it would mean a
lot of unemployment for bankers, but who is going to shed one tear for these
useless, worthless parasites who contribute nothing to the common weal? Let
them taste a period of unemployment or redundancy for a few years and see if
and how they manage to survive. The immediate net effect would be to begin to
bring down housing prices in London and the South East of England, and begin to
start to re-balance the current disparity in earnings and wages between people
who perform useful social functions and those wanker-bankers who add nothing to
society except to force commodity prices upwards through the power of their ludicrous
bonuses and their inflated salaries.

Another great piece Rowan. Now what to do? Whilst the rebel in me suggests something terrible - pragmatism rules. Therefore I suggest (again) that a website is set up that names all the directors of HSBC and its subsidiaries who are ordinarily resident in UK. Alongside their names add home addresses, telephone numbers and email addresses. Then list the crimes the bank has already been found guilty of and invite suggestions. The site should say that no one should take any criminal act against any of them but boycotts and personal harrassment are another matter. When these cretins can no longer get petrol for their cars, go shopping, eat in a restaurant or be seen in public, things might change. We have to make them 'prisoners' of society. it will take a bit of organising but it can't be that hard, can it?

Thank you for your excellent work, Rowan. I had the dubious fortune of being a stock and commodities broker on Wall St. until my retirement a few years ago...and saw first hand the kleptocracy going on. Left several positions because I refused to lie and steal! So, never made the millions, but I can sleep at night. I have been telling friends and associates for years that there is this "hot ball" of dough seeking quick profits, which at least in part accounts for the apparent anomaly of a rising stock market amid our ongoing world-wide economic collapse, as well as what I view as massive speculation by deep pockets here in SE Asia, constructing endless resorts for their fellow one-perceters.

An excellent piece Rowan. However, you're certainly aware that US DOJ prosecutors have done absolutely nothing to bring criminal charges against senior officers at HSBC. In fact, their "deferred prosecution agreement" actually precludes criminal charges ever being laid against these disreputable cretins. Although a $1.9 billion fine sounds hefty, it is a small fraction of their 2011 profits. In other words, it is a shell game and a monumental fraud which dupes the public into believing that the government is taking steps to "rein in" criminal banks. I've explored these issue on my blog, Antifascist Calling http://antifascist-calling.blogspot.com/. The HSBC DPA template fully conforms to the model which DOJ used with UBS in 2009, Wachovia in 2010 and will undoubtedly employ if and when charges are laid against JPMorgan Chase and BofA for similar criminal conduct. I wouldn't put much stock in the "integrity" of the US Department of Justice, especially from a regime committed to "looking forward, not backward"!

The linkage between organized crime and government is neglected. The Salinas brothers ruled Mexico as their Narco-fiefdom, and the CIA has been a major dope trader for many years.

CIA Drug Trafficking - Deep Black Lieswww.deepblacklies.co.uk/cia_drug_trafficking.htmThe CIA's involvement in the drug trade was to generate funds to pay for the ... its predecessor, the Office of Strategic Service (OSS) already had grimy hands.CIA Involvement in Drug Smuggling Part 1 « Dark Politicsdarkpolitics.wordpress.com/cia-involvement-in-drug-smuggling-part...EARLY COMPLICITY IN DRUG TRAFFICKING. THE OSS: FORERUNNER TO THE CIA. The “multinational” business of drug trafficking can be traced back to the ...A History of CIA Complicity in Drug International Traffickingciadrugs.homestead.com/files/congress-cia-drug-history-doc.htmlA Tangled Web: A History of CIA Complicity in Drug International Trafficking: WORLD WAR II. The Office of Strategic Services (OSS) and the Office of Naval ...The Corbett Report | The CIA and the Drug Trade (Eyeopener ...www.corbettreport.com/the-cia-and-the-drug-trade-eyeopener-previe...Oct 16, 2011 – The CIA and the Drug Trade (Eyeopener Preview) ... Skull and Bones and the American intelligence establishment from the OSS to the CIA is ...History 101: The CIA & Drugs | Mother Joneswww.motherjones.com/politics/1998/06/history-101-cia-drugsA Tangled Web: A History of CIA Complicity in Drug International Trafficking. WORLD WAR II. The Office of Strategic Services (OSS) and the Office of Naval ...

Good article - but from our experience you just find that the bank hide behind their tame solicitors and keep telling you "you don't know what you are talking about".

In our case the bank lied about the value and state of our future home during the mortgage application process, leading us to buy a property that was not fit for mortgage and is now worth less than half of what we paid for it.

The worst of it is the statement by Hb*S customer services is "well it is only your opinion that we lied"!

Unless you’ve already happened across him, you might consider reading some of Bill Black’s articles on systemic fraud and criminogenic environments. He’s also very good at skewering the inaccuracies of neo-conservative rhetoric.

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!